Yesterday’s clear break below 03-Jan’s 9.37 initial counter-trend low reinforces our count calling for a (suspected 2nd-Wave) correction of Dec’s rally introduced in 06-Jan’s Technical Blog following 03-Jan’s bearish divergence in momentum.  This resumed slide leaves 08-Jan’s 9.51 high in its wake as the latest smaller-degree corrective high the market is now required to sustain losses below to maintain a more immediate bearish count.  Its failure to do so will render the sell-off attempt from 02-Jan’s 9.61 high a 3-wave and thus corrective affair consistent with our long-term base/reversal count.  Per such, this 9.51 level becomes our new short-term risk parameter from which non-bullish decisions like long-covers and bearish punts can be objectively rebased and managed.

The daily log scale chart above shows 03-Jan’s bearish divergence in momentum from the extreme upper recesses of a 7-month lateral range in the Mar contract that broke Dec’s uptrend.  Given the 5-wave impulsive nature of Dec’s rally however, along with what has been historically bearish sentiment and Dec’s reaffirmation of a 7-MONTH recovery from May’19’s 7.91 low, a major, multi-quarter base/reversal count remains intact, with whatever near term concessions the market has in store considered another corrective buying opportunity for long-term players.

Commensurately larger-degree weakness below 02-Dec’s 8.82 low and key long-term risk parameter remains minimally required to negate this specific bullish count.  This said, at least the intermediate-term trend is down with a confirmed bullish divergence in momentum needed to arrest this relapse and reject/define a more reliable level from which shorter-term traders can objectively resumed a bullish tack.  In effect, the short-term trend is down within a still0-arguable long-term uptrend.

These issues considered, an interim bearish policy and exposure remain advised for shorter-term traders with a recovery above 9.51 required to negate this count, warrant its cover and re-expose the broader bull.  Long-term players remain advised to maintain a cautious bullish policy with a failure below 8.82 required to negate this call and warrant its cover.  We will be watchful for a relapse-stemming bullish divergence in momentum around the 9.10-area for a preferred risk/reward buying opportunity for shorter-term traders.

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